The new relief targets specific groups, continuing efforts after Supreme Court setbacks on broader plans.

In a decisive move to address the student debt crisis, President Joe Biden’s administration has declared the cancellation of $7.4 billion in student loans for 277,000 borrowers. Announced on Friday, this action forms part of Biden’s continued commitment to relieve student debt, a promise central to his campaign. This latest round of forgiveness brings the total debt cancelled under his administration to approximately $153 billion, affecting over 4.3 million borrowers.

During a recent conference call with journalists, Education Secretary Miguel Cardona highlighted personal stories of those burdened by student loans, including a New York teacher whose debt doubled over a decade due to high-interest rates. Cardona emphasized, “We are fixing a broken system,” signalling a robust approach to overhauling student loan policies.

Eligibility for this new wave of debt relief is specific to three main groups. The largest portion, amounting to $3.6 billion, will benefit 206,800 borrowers participating in the Saving on a Valuable Education (SAVE) plan. This plan, introduced by the Biden administration, focuses on income-driven repayment adjustments, providing relief after consistent payments over a decade, primarily aiding those who initially borrowed $12,000 or less for their education.

Another $3.5 billion is set aside for 65,700 borrowers in income-driven repayment plans who have faced difficulties due to administrative errors by loan servicers. These adjustments ensure that borrowers who have fulfilled their repayment obligations despite systemic failures will receive their due relief.

Additionally, $300 million will assist 4,600 borrowers through the Public Service Loan Forgiveness (PSLF) program, designed to aid public servants like teachers and government employees in receiving loan forgiveness after ten years of payments. The administration has greatly expanded the reach of this program compared to previous years.

Despite these advances, the administration’s efforts face legal challenges from Republican attorneys general in 18 states, arguing that the SAVE plan exceeds presidential authority and disrupts state employment strategies. These legal disputes raise questions about the future of these debt relief measures, though immediate clawbacks of already cancelled debts are deemed unlikely.

As the Biden administration pushes forward with these initiatives, the impact of these measures on millions of Americans looms large, potentially setting a precedent for future educational financing reforms.